Li Ning Earnings: We Maintain Fair Value Estimate Despite Short-Term Setbacks

Narrow-moat Li Ning's second-half 2023 results were below our expectations, and management’s guidance for 2024 also fell short. However, we believe management’s weaker-than-expected guidance is more of a reflection of continued effort to manage channel conflict, as opposed to a reflection of a weaker brand. As a result, we fine-tuned our near-term estimates but maintain our HKD 37.50 fair value estimate. With shares trading at just 14 times 2024 earnings, we view Li Ning’s shares as undervalued.